DOJ Sued For Crony Justice - Presenting "A Decade of Illegal Conduct by JP Morgan Chase"

Tyler Durden's picture

Earlier today, the non-profit organization Better Markets did what so many others have only dreamed of doing - they sued the Department of Justice.

Specifically, as they disclose in the fact sheet posted on their website, they are "challenging the historic and unprecedented $13 billion settlement agreement between the U.S. Department of Justice and JP Morgan Chase (“Agreement”).  Better Markets alleges in its complaint that the DOJ violated the Constitution and laws of the United States by using a mere contractual agreement to resolve claims of historic importance without subjecting the Agreement to independent judicial review.  In effect, the DOJ acted as investigator, prosecutor, judge, jury, sentencer, and collector, without any check on its authority or actions, even though the amount is the largest in the 237 year history of the United States. Because the DOJ has declared its intention to use the Agreement as a “template” in future similar cases, it is imperative that the DOJ’s unlawful and secretive approach in the settlement process be subjected to judicial review."

We wish them the best of luck, as in a "crony jsutice" system as corrupt as this one - perhaps best described, paradoxically enough by the fictional movie The International - where the same DOJ previously implicitly admitted it will not prosecute "systemically important" firms like JPM to the full extent of the law and instead merely lob one after another wrist slap at them to placate the peasantry, any hope for obtaining true justice is impossible.

That said, the key aspects of the Better Markets lawsuit deserve attention. They are broken down as follows:

For years leading up to the financial crisis of 2008, JP Morgan Chase allegedly engaged in pervasive fraud in the packaging and sale of thousands of mortgage-backed securities to investors.  Those securities were stuffed with subprime loans that failed to meet applicable underwriting criteria.  Employees, managers, and potentially high-level executives of JP Morgan Chase knew that the securities were riddled with toxic loans, but they allegedly concealed the truth from investors when they marketed and sold the securities.  Investors lost huge but still unknown sums of money as a result of the fraud, and the bank’s illegal conduct contributed directly to the biggest financial crash since 1929 and the worst economy since the Great Depression of the 1930s.  
 
After negotiating the Agreement in complete secrecy, the DOJ announced the $13 billion deal on November 19, 2013, claiming that it was holding JP Morgan Chase accountable for its illegal activities.  Under the Agreement, DOJ grants JP Morgan Chase broad civil immunity in exchange for a $2 billion civil penalty, along with $4 billion in “consumer relief” for the benefit of homeowners with problem mortgages.  The Agreement also allocates $7 billion to eight other agencies or states to resolve their claims against JP Morgan Chase.
 
Key Allegations in the Complaint

The Agreement was struck under the most extraordinary circumstances.  For example—

  • THE HISTORIC CLAIMS:  The Agreement resolved claims of pervasive fraud that contributed to the worst financial crash since 1929 and the worst economy since the Great Depression of the 1930s.
  • THE LARGEST AMOUNT EVER:  The settlement amount was the largest in U.S. history from any single entity by more than 300%.
  • THE BIGGEST BANK:  JP Morgan Chase is the largest, richest, and most well-connected Wall Street bank in the United States.
  • THE HIGHEST-LEVEL NEGOTIATORS: The Attorney General and other senior DOJ political appointees negotiated directly and entirely in secret with the CEO of JP Morgan Chase, someone who was considered a possible Treasury Secretary just a few years ago.
  • THE $10 BILLION PHONE CALL:  The cellphone of DOJ’s third highest ranking official rang with the “familiar” phone number of JP Morgan Chase’s CEO, who called to offer billions of dollars to stop DOJ from holding a press conference and filing a lawsuit in just a few hours.  The call worked, and the press conference and lawsuit were both called off. 
  • THE UNPRECEDENTED AGREEMENT:  DOJ gave complete civil immunity to JP Morgan Chase for defrauding thousands in exchange for $13 billion, via a contract that was negotiated and finalized in secret without any review or approval by a federal court.

?Notwithstanding the historic nature of the settlement, the Agreement was never subjected to judicial review, so there has been no independent evaluation of its terms.  Furthermore, the vague settlement documents fail to disclose critically important information about every aspect of the deal.  For example, the Agreement fails to identify or explain— 

  • THE LOSSES:  How much did JP Morgan Chase’s clients, customers, counterparties, investors, and others lose as a result of its fraudulent conduct?  $100 billion?  $200 billion?  More?
  • THE PROFITS:  How much revenue, profits, and other benefits did JP Morgan Chase receive as a result of its fraudulent conduct, and was it all disgorged?  $10 billion?  $20 billion?  More?
  • THE BONUSES:  Who received what amount of bonuses for the illegal conduct?
  • THE INVESTIGATION:  What was the scope and thoroughness of the investigation that provided the basis for the Agreement?
  • THE FRAUD:  What are the material facts of the illegal conduct by JP Morgan Chase and the specific violations of law that were committed?
  • THE CULPRITS: What exactly did the individual executives, officers, managers, and employees involved in the illegal conduct actually do to carry out the fraud, and do any of them still work for the bank?
  • THE CORRECTIVE ACTION:  Why did the contract fail to impose on JP Morgan Chase any obligation to change any of its business or compliance practices, which are standard conduct remedies that regulators routinely require?  And how can the sanctions effectively punish and deter JP Morgan Chase, given its wealth and its extensive history of lawless conduct?
  • THE LACK OF ADMISSIONS:  Why are there no admissions of fact or law by JP Morgan Chase, and what, if any, are the concrete legal implications of their so-called “acknowledgment”?

By entering the Agreement without seeking any judicial review and approval, the DOJ violated the Constitution and laws of the United States. 

  • The Executive Branch, acting through the DOJ, violated the separation of powers doctrine by unilaterally striking a bargain with JP Morgan Chase to resolve unprecedented matters of historic importance, without seeking any judicial review and approval of the Agreement.
  • The DOJ violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) by failing to commence a civil action in federal court so that the court could, among other things, assess the civil penalty.
  • The DOJ acted arbitrarily and capriciously by, among other things, entering the Agreement without seeking judicial review and approval.

* * *

But perhaps the most informative aspect of the lawsuit fact sheet is simply stepping back and observing the relentless illegal transgressions by Jamie Dimon's firm. Better Markets summarizes them best as follows:

Highlights From A Decade of Illegal Conduct by JP Morgan Chase

  • United States v. JPMorgan Case Bank, NA, No-1:14-cr-7 (S.D.N.Y. Jan 8, 2014) ($1.7 billion criminal penalty); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-13-109 (Jan. 7, 2014) ($350 million civil penalty); In re JPMorgan Chase Bank, N.A., Dept. of the Treasury Financial Crimes Enforcement Network Admin. Proceeding No. 2014-1 (Jan. 7, 2014) ($461 million civil penalty) (all for violations of law arising from the bank’s role in connection with Bernie Madoff’s Ponzi scheme, the largest in the history of the U.S.);
  • In re JPMorgan Chase Bank, N.A., CFTC Admin. Proceeding No. 14-01 (Oct. 16, 2013) ($100 million civil penalty); In re JPMorgan Chase & Co., SEC Admin. Proceeding No. 3-15507 (Sept. 19, 2013) ($200 million civil penalty); In re JPMorgan Chase & Co., Federal Reserve Board Admin. Proceeding No. 13-031-CMP-HC (Sept. 18, 2013) ($200 million civil penalty); UK Financial Conduct Authority, Final Notice to JP Morgan Chase Bank, N.A. (Sept. 18, 2013) (£137.6 million ($221 million) penalty); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-2013-75, #2013-140 (Sept. 17, 2013) ($300 million civil penalty) (all for violations of federal law in connection with the proprietary trading losses sustained by JP Morgan Chase in connection with the high risk derivatives bet referred to as the “London Whale”);
  • In re JPMorgan Chase Bank, N.A., CFPB Admin. Proceeding No. 2013-CFPB-0007 (Sept. 19, 2013) ($20 million civil penalty and $309 million refund to customers); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-2013-46 (Sept. 18, 2013) ($60 million civil penalty) (both for violations in connection with JP Morgan Chase’s billing practices and fraudulent sale of so-called Identity Protection Products to customers);
  • In Re Make-Whole Payments and Related Bidding Strategies, FERC Admin. Proceeding Nos. IN11-8-000, IN13-5-000 (July 30, 2013) (civil penalty of $285 million and disgorgement of $125 million for energy market manipulation);
  • SEC v. J.P. Morgan Sec. LLC, No. 12-cv-1862 (D.D.C. Jan. 7, 2013) ($301 million in civil penalties and disgorgement for improper conduct related to offerings of mortgage-backed securities);
  • In re JPMorgan Chase Bank, N.A., CFTC Admin. Proceeding No. 12-37 (Sept. 27, 2012) ($600,000 civil penalty for violations of the Commodities Exchange Act relating to trading in excess of position limits);
  • In re JPMorgan Chase Bank, N.A., CFTC Admin. Proceeding No. 12-17 (Apr. 4, 2012) ($20 million civil penalty for the unlawful handling of customer segregated funds relating to the bankruptcy of Lehman Brothers Holdings, Inc.);
  • United States v. Bank of America, No. 12-cv-00361 (D.D.C. 2012) (for foreclosure and mortgage-loan servicing abuses during the Financial Crisis, with JP Morgan Chase paying $5.3 billion in monetary and consumer relief);
  • In re JPMorgan Chase & Co., Federal Reserve Board Admin. Proceeding No. 12-009-CMP-HC (Feb. 9, 2012) ($275 million in monetary relief for unsafe and unsound practices in residential mortgage loan servicing and foreclosure processing);
  • SEC v. J.P. Morgan Sec. LLC, No. 11-cv-03877 (D.N.J. July 7, 2011) ($51.2 million in civil penalties and disgorgement); In re JPMorgan Chase & Co., Federal Reserve Board Admin. Proceeding No. 11-081-WA/RB-HC (July 6, 2011) (compliance plan and corrective action requirements); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-11-63 (July 6, 2011) ($22 million civil penalty) (all for anticompetitive practices in connection with municipal securities transactions);
  • SEC v. J.P. Morgan Sec., LLC, No. 11-cv-4206 (S.D.N.Y. June 21, 2011) ($153.6 million in civil penalties and disgorgement for violations of the securities laws relating to misleading investors in connection with synthetic collateralized debt obligations);
  • In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-11-15, #2011-050 (Apr. 13, 2011) (consent order mandating compliance plan and other corrective action resulting from unsafe and unsound mortgage servicing practices);
  • In re J.P. Morgan Sec. Inc., SEC Admin. Proceeding No. 3-13673 (Nov. 4, 2009) ($25 million civil penalty for violations of the securities laws relating to the Jefferson County derivatives trading and bribery scandal);
  • In re JP Morgan Chase & Co, Attorney General of the State of NY Investor Protection Bureau, Assurance of Discontinuance Pursuant to Exec. Law §63(15) (June 2, 2009) ($25 million civil penalty for misrepresenting risks associated with auction rate securities);
  • In re JPMorgan Chase & Co., SEC Admin. Proceeding No. 3-13000 (Mar. 27, 2008) ($1.3 million civil disgorgement for violations of the securities laws relating to JPM’s role as asset-backed indenture trustee to certain special purpose vehicles);
  • In re J.P. Morgan Sec. Inc., SEC Admin. Proceeding No. 3-11828 (Feb. 14, 2005) ($2.1 million in civil fines and penalties for violations of Securities Act record-keeping requirements); and
  • SEC v. J.P. Morgan Securities Inc., 03-cv-2939 (WHP) (S.D.N.Y. Apr. 28, 2003) ($50 million in civil penalties and disgorgements as part of a global settlement for research analyst conflict of interests).

Did we mention that nobody from JPM has gone to prison, and instead as of late last week, one of the biggest JPM culprits was set to become a member of the CFTC's advisory panel before the people and not the regulators, were forced to step in? Why? #AskJPM

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buzzsaw99's picture

stay away from hot tubs bitchez

Levadiakos's picture

As long as Jamie's bonus is safe the media, and by extension the public, doesn't care. It's all good.

TheTmfreak's picture

"Better Markets alleges in its complaint that the DOJ violated the Constitution and laws of the United States by using a mere contractual agreement to resolve claims of historic importance without subjecting the Agreement to independent judicial review"

This was exactly my fucking point regarding the Europe Corruption article.
So in otherwords, this ISN"T corruption? This is 100% legalized corruption. This is JP Morgan bribing the ENTIRE government to conduct whatever fucking actions it sees fit. This is also government, officials, otherwise known as individuals, choosing the particular "punishment" (bribe) for the actions they deem bribable.

Then they're establishing a precident so they can use that as their "template".

 

 

NoDebt's picture

Yes.  In a simpler age they called this practice "Buying Papal Indulgences."

I just didn't want you thinking this was something new and unprecedented in human experience.  It's corruption.  Plain and simple.  And it will continue, if not increase in coming years.

 

NotApplicable's picture

And it's the only reason that government exists.

Tribute, bitchez!

Temporalist's picture

I just want to know what kind of inbred retards still want to keep their money with criminal enterprises like JPMorgue, GoddamnSux, ShittyBunk, HSBS et al?  Other than other criminals of course.  All the employees and customers of these corrupt houses of horror should be shunned and ostracized.

James_Cole's picture

I just want to know what kind of inbred retards still want to keep their money with criminal enterprises like JPMorgue, GoddamnSux, ShittyBunk, HSBS et al? 

Almost impossible not to deal with one of the TBTJ, they have their tentacles everywhere. 

gmrpeabody's picture

Fuck the muppets...

Oh.., wait.

Ms. Erable's picture

Any wagers on how long the court takes to issue a 'no standing' ruling against the plaintiff?

ParkAveFlasher's picture

"Back off, or the dollar gets it!"  [cocks silver position to "long"] "I mean it!"  - Jaime Dimon

gmrpeabody's picture

CLASSIC...

Damn near choked on my olive...

buckethead's picture

I need more upvoting powers.

Hippocratic Oaf's picture

Puerto Rico possibly in talks with RBC for $2-$2.5B private financing as per Bloomberg.

Near term default may be off the table.

game theory's picture

$2b...that's like plugging the leak in the titanic with bubble gum. A miracle is required to save PR...although I would not be surprised by a stealth bailout...it may even be creative...like a switch from QE3 to QE-PR. Isn't it fun living in the land of "make believe we aren't as corrupt as China"? 

Oh regional Indian's picture

Incidentally, the FED is a trust registered in PR.

General FYI.

ori

NoDebt's picture

Proof, please.  THis one I gotta see.

game theory's picture

What does that matter? The Fed's charter is pretty clear [it can do whatever it wants].

Steaming_Wookie_Doo's picture

I thought it was the IRS reg in PR. Anyway, regardless of the location of the trust, it's not like the Puerto Ricans can suddenly march in and take it over, any more than the Cubans can do the same for Gitmo.

Urban Redneck's picture

All PR needs to do is grant some offshore mineral leases to the Chinese, who can dump USTs they don't really want anyway to plug the holes in the PR balance sheet- problem solved.

(until we found out what the pirated Chinese version of Corexit actually contains)

Canadian Dirtlump's picture

In other news a JP morgan executive's death is being treated as non suspicious after he slipped out of a hot tub off the 50th floor of their head office while doing a woodworking project and acccidentally shooting himself up with a pneumatic nail gun.

Canadian Dirtlump's picture

You mean the ones blythe farted up and steeped her fetid ham wallet in? You couldn't drag me there even in a haz mat suit. I'd rather skinny dip in fukushima. Ever wonder why she wears silver shorts? Because of the anti bacterial properties.

 

Either way hats off to the bastards because up until now they've managed to break every rule in the book, bankrupt people, cities an counties, wreak havoc, ruin lives and make billions while doing it. All the while, in modern day pharisee fashion, doing so whle being showered with the adulation of the gum chewing unwashed masses and the propaganda spewing fukktards in the media.

 

Boy it's going to feel good once this thing blows. Like homer simpson mowing the lawn in marge's dress just so he could see Ned flanders doing the same thing - I know I'll feel the pinch but I would love nothing more than to see Dimon over a spit with an apple in his mouth.

maskone909's picture

when you sue a TBTF bank, you sue the american taxpayer.

Skateboarder's picture

When you sue the American taxpayer, you're actually suing their great-great-grandkids.

waterwitch's picture

I think the FED has already done that.

Motorhead's picture

Speakin' of the JP Morgue, where are the Silver Bears?!?

Canadian Dirtlump's picture

probably giving us some time to heal and dipping their cowboy boots in water and freezing them so next time they kick us in the balls it will hurt worse. LMAO.

 

Apparently the COT fwiw indicates that given some folks flipping long the bottom may be in.

Superdude's picture

"Beating down non-profits makes my dick hard."

J. Dimon

texas sandman's picture

What do you have against apples?

Bunders's picture

Signed in just to +1 "fetid ham wallet"

Mister Kitty's picture

Jamie Dimon sucks ass.  But he's a member of the Ivy League Mafia.  Those guys are above the law.  So what's a boy to do?  Bastards.

tradewithdave's picture

Breurian Ripple Effect.... The Himpton Doctrine. 

FieldingMellish's picture

Never a losing day in the markets for the Morgue or the Squid.

Cacete de Ouro's picture

"JP Morgan Chase is the largest, richest, and 'most well-connected Wall Street bank' "

"Well-connected" .. they sure are.. via the tunnel from Chase Plaza to FRBNY

KnightTakesKing's picture

Yeah, about that tunnel. I think the Chinese now control it . Makes it easier to get the gold from the West. SGE is so passe.

Sudden Debt's picture

THE COURT HAS DECIDED THAT ALL SENIOR MANAGEMENT MEMBERS SHOULD GET ANOTHER BONUS!!

RaiZH's picture

Hold my beer... I'm going to go sue Bernanke 

LawsofPhysics's picture

Wake me when all the executives from the TBTF banks have all their wealth confiscated and they go to jail or are put to death.

Otherwise, nothing changes...

OC Sure's picture

Do you really think it is the bankers themselves that are the problem or the system that they are forced to operate in?

When the system is evil, how would you expect it attract Just actions. Tossing bankers around won't solve the problem and even then nothing changes unless the system is fixed too.

“When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded."  Atlas Shrugged, Ayn Rand 1958

LawsofPhysics's picture

Are you an absolute twat?  I don't think you understand the book you reference.  The bankers are not being "forced" to do anything dipshit.  Quite the opposite actually as it is you who is being forced to accept their paper promises in exchange for the fruits of your labor.

OC Sure's picture

Stay on target. It is the central bank that is operating outside of the law. All the others are acting the way they do because of the central bank. The central bank is the source of the evil. If you do not attack it, then you are just wrestling tenacles.

LawsofPhysics's picture

Bullshit.  The primary dealers are part of the central bank.  Let me be clear, fuck all the banks/bankers, they are all traitors to the constitution and the republic.  You "stay on target", get the fuck out of paper, all paper.  If you are playing the paper "markets", it is you who is "wrestling with tenticles".

OC Sure's picture

If you want to kill the monster, then its head must be decapitated.

The Fed is the head.

LawsofPhysics's picture

You want the Fed dead?  Stop using their paper!

OC Sure's picture

How?

If Laissez-Faire City exists, i'd go faster than you can shout your next insult.

LawsofPhysics's picture

Trade services for services for starters, not that hard really.

 

By PMs, pay under the table.  I had a plumber run a sewer line 50 feet for $500 worth of silver.

Something that would have cost at least $5,000 FRNs.

OC Sure's picture

I barter the best I can. It is a good start.

SilverIsKing's picture

Why wouldn't your plumber require payment of $5k in FRNs and then go buy $5k worth of silver?

disabledvet's picture

Andrew Jackson.

Just saying the name gives me goosebumps.

We have had many Generals as Presidents...though certainly not in a long time.